Silver State Slipups

An ad from a PAC headed by tea party Republican Sharron Angle relies on several dubious comparisons to attack the Affordable Care Act’s state-run exchange in Nevada.

The ad claims Nevada’s exchange “has brought the highest increase in premiums in the country” — 179 percent. The claim relies on an analysis from a conservative think tank that purports to compare pre- and post-ACA insurance rates on the individual market, but the state’s Department of Insurance says the comparison is not “fair” or “accurate.”

The on-screen text claims that the Nevada exchange offers “33 percent of the benefits of the federal exchange.” All exchange plans — regardless of whether offered on state-based or federally run marketplace exchanges — are required to cover the same set of essential health benefits.

The ad claims enrollment in the exchange has been far less than what was “projected, and needed.” Enrollment has, indeed, fallen short of initial goals, and even the more modest goals reset in February, but exchange officials say the program is “sustainable” with the current enrollment.

The ad comes from OurVoice PAC, which is chaired by Angle, who lost in a bid to unseat Senate Majority Leader Harry Reid in 2010. OurVoice PAC lists its top two goals as removing Reid, a Democrat, from office in the 2016 election, and winning back “a conservative (TEA Party) GOP majority in the United States Senate through the 2014 and 2016 elections.”

The group is also adamantly opposed to the Affordable Care Act, and seeks to repeal “state Obamacare exchanges.” The ad, called “Time for Some Truth,” argues that the Nevada exchange, the Silver State Health Insurance Exchange, is a “failure” that must be made “unconstitutional.”

To be sure, the state-run Nevada exchange has gotten off to a rocky start with website problems, long wait times at call centers and lower-than-expected enrollment. But the claims in the ad go too far. We’ll address the ad’s three main claims in order.

Nevada: Highest Premium Increases in the Country?

The ad begins with the narrator stating, “It’s time for some truth: Nevada’s Obamacare exchange has brought the highest increase in premiums in the country.” On screen, it says, “Nevada’s Obamacare Exchange brings 179 percent increase in health insurance premiums for Nevadans; the highest increase in the U.S.”

That statistic is sourced on-screen to a Forbes magazine article, but the original source is an analysis by the Manhattan Institute, a conservative think tank. The analysis purports to provide a state-by-state breakdown of the change in insurance rates in the individual market both before and after passage of the Affordable Care Act. So first, viewers should know that the ad’s claim about a 179 percent increase in health insurance premiums refers only to those in the individual market (those who buy insurance on their own as opposed to through an employer). About 124,000 Nevadans, 5 percent of the state’s population, purchased their own insurance in 2012, according to the nonpartisan Kaiser Family Foundation.

Representatives of the Nevada Division of Insurance said that, as a nonpartisan agency, they could not comment specifically on the ad. But they do take issue with the methodology of the Manhattan Institute study, as we did when we wrote about a Heritage Action mailer that cited the same analysis to criticize the Virginia exchange.

The Manhattan Institute report compared the lowest cost premiums on the individual market before the exchanges, adjusted for preexisting condition denials or rate hikes, in each state with the lowest cost premiums on the new exchanges. The methodology explains that the analysis included the five least expensive plans on a county basis before the law took effect and those now being sold on statewide exchanges, excluding catastrophic plans, for 27-, 40- and 64-year-old males and females who don’t smoke.

The institute didn’t adjust for the fact that the ACA requires certain minimum benefits, which many individual market plans don’t meet. By and large, the post-ACA plans are more robust (whether purchasers like or want that or not).

“They are not comparing the same types of plans and products,” said Jake Sunderland, a spokesman for the Nevada Division of Insurance. “We don’t think it was a fair and accurate comparison. You can’t compare pre-ACA and ACA plans because they are so different. … Did rates go up? Yes. But so did benefits. They are not the same types of plans.”

The Manhattan Institute analysis didn’t include premiums for catastrophic plans, which could offer a cheaper option to those 27-year-olds. On the exchanges, those under age 30 can purchase catastrophic plans, which cover less than 60 percent of the average cost of health care. But these young adults won’t be eligible for subsidies if they choose such a plan. So, the analysis said the lowest cost premium in the individual market pre-ACA for a 27-year-old male was $71 on average, and that the lowest cost premium on the exchange was $304 on average. A catastrophic plan, however, is as low as $283 for a 27-year-old male (or as low as $172 a month for a 20-year-0ld male).

The figure cited in the ad also doesn’t account for subsidies, which the Manhattan Institute estimates will be available to 48 percent of uninsured Nevadans, or 246,771 people. Subsidies are available to those earning up to 400 percent of the federal poverty level, which is nearly $46,000 for a single person and about $94,000 for a family of four. We can’t vouch for the claim about those eligible for subsidies in Nevada, but the Congressional Budget Office estimated that about 80 percent of all those buying exchange plans nationwide would qualify for subsidies.

Because of the new minimum coverage requirements, and offsetting subsidies, comparing pre- and post-ACA rates is fraught with difficulty.

“The products in the exchange are going to be significantly different than products available right now,” Nevada Insurance Commissioner Scott Kipper told the Las Vegas Review-Journal last summer. “They’re meeting new federal requirements, as well as wrapping around mandates we have here in the state. It’s very difficult to compare plans and make an apples-to-apples comparison.”

The nonpartisan Kaiser Family Foundation also balked at comparisons of pre- and post-ACA plans in the individual market. It said the changes in this market — including minimum benefit requirements and no denial or price variation based on health status — “make direct comparisons of exchange premiums and existing individual market premiums complicated, and doing so would require speculative assumptions and data that are not publicly available.”

Fewer Choices? Less Benefits?

Next, the ad claims that even with its high cost, the Nevada exchange “has only a third of the health care choices offered by the federal exchange.” On screen, it says, “33 percent of the benefits of the federal exchange.” The voice-over and on-screen text don’t say the same thing.

The on-screen text claims that the Nevada exchange offers “33 percent of the benefits of the federal exchange.” All exchange plans — regardless of whether offered on state-based or federally run marketplace exchanges — are required to cover the same set of essential health benefits. So it’s unclear to which benefits the ad is referring.

The ad offers no on-screen citation for this claim, and we did not hear back from OurVoice after seeking clarification.

As for “choices,” it is difficult to compare the number of insurance carriers and health plans available in the Nevada exchange to state exchanges run by the federal government because the numbers vary from state to state, and even within different parts of each state.

Nevada has fewer insurance carriers participating than the average in state exchanges run by the federal government. There are four insurance carriers participating in the individual market on the Nevada exchange (though only two in rural areas of the state). On average, there are eight different health insurance issuers participating in each of the state exchanges run by the federal government, although it ranges from a low of one to a high of 13.

The number of qualified health plans offered in Nevada (excluding catastrophic plans) ranges from 87 in counties like Clark and Washoe (the homes of Las Vegas and Reno, respectively) to 12 in many of the rural counties. The number ranges from a low of six to a high of 169 plans in rating areas of federally run state exchanges. On average, individuals and families in the 36 federally run state exchanges will have 53 qualified health plans from which to choose within their rating area. We could find no comparable statewide average for Nevada.

The larger point is that more densely populated states generally have more carriers and plan options than less densely populated states, and urban areas generally have more choices than rural areas. These decisions are made by the insurance companies, not the state or federal exchanges. The insurance companies decide whether they want to participate.

“Each carrier has the option to offer a plan,” CJ Bawden, a spokesman for the Silver State Health Insurance Exchange, told us in a phone interview. “That’s part of the free market we have in this country.”

Enrollment

Finally, the OurVoice ad’s narrator claims, “It’s no surprise the enrollment in Nevada’s exchange is a fraction of what was projected, and needed.” On screen is a graphic showing enrollment of 118,000 was “needed,” but only 14,999 had “signed up.”

It’s true that the Silver State Health Insurance Exchange initially set a goal of 118,000 enrollees by March 31. That goal was later revised to 50,000 in February by the then-executive director (who later resigned).

As of March 15, 33,053 people had selected plans through the Nevada exchange, and 22,533 of them had made payments, said Bawden, the Nevada exchange spokesman. So there’s no question enrollment has fallen short of the stated goals — even the lower, revised goal of 50,000. But what’s “needed”?

“That [118,000] was the goal,” Bawden said. “It doesn’t have anything to do with sustainability. It [the exchange] is sustainable at the enrollment it has right now.”

In other words, it would certainly be fair to criticize the Nevada exchange for falling short of enrollment goals, but the ad goes too far by claiming enrollment has fallen short of what the state says is “needed.”